Record Quarterly Revenue of Over $1 Billion

Positives Sales Momentum, Including New Awards With Altice USA, PJSC VimpelCom & Globe Telecom 

First Quarter Fiscal 2019 Highlights

  • Revenue of $1,012 million, slightly above the midpoint of the $990-$1,030 million guidance range including a negative impact from foreign currency movements of approximately $4 million relative to the fourth quarter of fiscal 2018 and also relative to our first quarter guidance
  • GAAP diluted EPS of $0.72, above the midpoint of the $0.67-$0.75 guidance range
  • Non-GAAP diluted EPS of $0.98, at the midpoint of the $0.95-$1.01 guidance range
  • GAAP operating income of $133 million; GAAP operating margin of 13.2%
  • Non-GAAP operating income of $175 million; non-GAAP operating margin of 17.3%
  • Quarterly free cash flow of $72 million, comprised of cash flow from operations of $110 million, less $37 million in net capital expenditures and other, and normalized free cash flow of $136 million, excluding non-recurring payments of $55 million incurred to settle a previously disclosed long-running legal dispute, payments for previously expensed restructuring charges of $7 million and net capital expenditures related to the new campus development of $2 million
  • Twelve-month backlog of $3.37 billion, up $10 million sequentially
  • The board of directors approved a quarterly cash dividend at the new increased rate of $0.285 per share, as approved at the January 2019 annual general meeting of shareholders, to be paid on April 19, 2019

ST. LOUIS, Feb. 05, 2019 (GLOBE NEWSWIRE) -- Amdocs Limited (NASDAQ: DOX) today reported operating results for the three months ended December 31, 2018.

“We are pleased to report a solid start to the fiscal year, with first quarter revenue above the midpoint of our guidance. North America grew year-over-year as we supported the digital modernization requirements of many of our communications, Pay TV and media customers, while Europe delivered another solid quarter adjusting for foreign currency headwinds. At the operating level, we delivered another quarter of stable profitability which reflects such factors as our highly recurring revenue stream, the scalability of our global delivery model and our constant drive to improve efficiency,” said Shuky Sheffer, president and chief executive officer of Amdocs Management Limited.

Sheffer continued, “During Q1, we won several new deals that demonstrate the execution of our strategy, our market leadership and extend our penetration across regions. We signed a multi-year agreement to accelerate Altice USA’s digital and mobile offerings, while in Europe we won a significant digital modernization project and managed services agreement with PJSC VimpelCom in Russia, and a new managed transformation deal with a Tier-1 service provider in Spain. Over in Rest of World, we signed a 5-year digital transformation and cloud migration deal with a leading Southeast Asian content and consumer provider. We also made exciting progress with Globe Telecom in the Philippines which has selected our Network Functions Virtualization solution to automate the operations and management of its Networks-as-a-Service offering for enterprise customers.”

Sheffer concluded, “Winning and delivering transformation projects requires the breadth of innovative solutions and track-record of execution that we believe can only be met with our unique capabilities and business model. Moreover, such projects provide important footholds in the market which over time translate to long-lasting customer relationships, ongoing service revenues and a base for future growth. Overall, we believe our market position is strong as we enter our second fiscal quarter, the outlook for which is supported by the visibility of our record 12-month backlog.”

Revenue

Revenue for the first fiscal quarter ended December 31, 2018 was $1,012 million, up $9.5 million sequentially from the fourth fiscal quarter of 2018 and up 3.5% as compared to last year’s first fiscal quarter. Revenue for the first fiscal quarter of 2019 includes a negative impact from foreign currency movements of approximately $4 million relative to the fourth quarter of fiscal 2018 and versus guidance.

Net Income and Earnings Per Share

The Company's GAAP net income for the first quarter of fiscal 2019 was $101.7 million, or $0.72 per diluted share, compared to GAAP net income of $116.9 million, or $0.80 per diluted share, in the prior fiscal year’s first quarter. Net income on a non-GAAP basis was $137.8 million, or $0.98 per diluted share, compared to non-GAAP net income of $154.5 million, or $1.06 per diluted share, in the first quarter of fiscal 2018. Non-GAAP net income excludes amortization of purchased intangible assets and other acquisition-related costs, changes in certain acquisitions related liabilities measured at fair value, and equity-based compensation expenses of $12.1 million, net of related tax effects, in the first quarter of fiscal 2019.

Returning Cash to Shareholders

  • Quarterly Cash Dividend Program: On February 5, 2019, the Board approved the Company’s next quarterly cash dividend payment of $0.285 per share and set March 29, 2019 as the record date for determining the shareholders entitled to receive the dividend, which will be payable on April 19, 2019.
  • Share Repurchase Activity: Repurchased $99 million of ordinary shares during the first quarter of fiscal 2019.

Twelve-month Backlog

Twelve-month backlog, which includes anticipated revenue related to contracts, estimated revenue from managed services contracts, letters of intent, maintenance and estimated on-going support activities, was $3.37 billion at the end of the first quarter of fiscal 2019, up $10 million from the end of the prior quarter.

Second Quarter Fiscal 2019 Outlook

  • Revenue of approximately $995-$1,035 million, assuming an immaterial sequential impact from foreign currency fluctuations as compared to the first quarter of fiscal 2019
  • GAAP diluted EPS of approximately $0.75-$0.83
  • Non-GAAP diluted EPS of approximately $1.00-$1.06, excluding amortization of purchased intangible assets and other acquisition-related costs, changes in certain acquisitions related liabilities measured at fair value, and approximately $0.05-$0.07 per share of equity-based compensation expense, net of related tax effects.

Full Year Fiscal 2019 Outlook

  • Expects revenue growth of 0.5%-4.5% year-over-year on a reported basis as compared with 1.0%-5.0% year-over-year previously
  • Reiterates revenue growth of 2.0%-6.0% year-over-year on a constant currency basis
  • Full year fiscal 2019 revenue guidance incorporates an expected negative impact from foreign currency fluctuations of about 1.5% year-over-year as compared with a negative impact of about 1.0% year-over-year previously
  • Reiterates GAAP diluted earnings per share growth of roughly 29.0%-38.0% year-over-year
  • Reiterates non-GAAP diluted earnings per share growth of roughly 3.0%-7.0% year-over-year, excluding amortization of purchased intangible assets and other acquisition-related costs, changes in certain acquisitions related liabilities measured at fair value, and approximately $0.22-$0.28 per share of equity-based compensation expense, net of related tax effects

Our second fiscal quarter 2019 and full year fiscal 2019 outlook takes into consideration the Company’s expectations regarding macro and industry specific risks and various uncertainties and certain assumptions that we will discuss on our earnings conference call. However, Amdocs notes market dynamics continue to shift rapidly and that it cannot predict all possible outcomes, including those resulting from T-Mobile’s proposed merger with Sprint, or from other current and potential customer consolidation activity.

Conference Call Details
Amdocs will host a conference call on February 5, 2019 at 5:00 p.m. Eastern Time to discuss the Company's first quarter of fiscal 2019 results. To participate, please dial +1 (844) 513-7152, or +1 (508) 637-5600 outside the United States, approximately 15 minutes before the call and enter passcode 1697728. The call will also be carried live on the Internet via the Amdocs website, www.amdocs.com.

Non-GAAP Financial Measures
This release includes non-GAAP diluted earnings per share and other non-GAAP financial measures, including free cash flow, non-GAAP cost of revenue, non-GAAP research and development, non-GAAP selling, general and administrative, non-GAAP operating income, non-GAAP operating margin, non-GAAP income taxes, non-GAAP effective tax rate, non-GAAP net income and non-GAAP diluted earnings per share growth. These non-GAAP measures exclude the following items:

  • amortization of purchased intangible assets and other acquisition-related costs;
  • changes in certain acquisition-related liabilities measured at fair value;
  • non-recurring and unusual charges;
  • equity-based compensation expense; and
  • tax effects related to the above.

These non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. Amdocs believes that non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with Amdocs’ results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Amdocs’ results of operations in conjunction with the corresponding GAAP measures.

Amdocs believes that the presentation of non-GAAP diluted earnings per share and other financial measures, including free cash flow, non-GAAP cost of revenue, non-GAAP research and development, non-GAAP selling, general and administrative, non-GAAP operating income, non-GAAP operating margin, non-GAAP income taxes, non-GAAP effective tax rate, non-GAAP net income and non-GAAP diluted earnings per share growth when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and results of operations, as well as the net amount of cash generated by its business operations after taking into account capital spending required to maintain or expand the business.

For its internal budgeting process and in monitoring the results of the business, Amdocs’ management uses financial statements that do not include amortization of purchased intangible assets and other acquisition-related costs, changes in certain acquisition-related liabilities measured at fair value, non-recurring and unusual charges, equity-based compensation expense and related tax effects. Amdocs’ management also uses the foregoing non-GAAP financial measures, in addition to the corresponding GAAP measures, in reviewing the financial results of Amdocs. In addition, Amdocs believes that significant groups of investors exclude these items in reviewing its results and those of its competitors, because the amounts of the items between companies can vary greatly depending on the assumptions used by an individual company in determining the amounts of the items.

Amdocs further believes that, where the adjustments used in calculating non-GAAP diluted earnings per share are based on specific, identified amounts that impact different line items in the Consolidated Statements of Income (including cost of revenue, research and development, selling, general and administrative, operating income, income taxes and net income), it is useful to investors to understand how these specific line items in the Consolidated Statements of Income are affected by these adjustments. Please refer to the Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP tables below.

Supporting Resources

About Amdocs

Amdocs is a leading software and services provider to communications and media companies of all sizes, accelerating the industry’s dynamic and continuous digital transformation. With a rich set of innovative solutions, long-term business relationships with 350 communications and media providers, and technology and distribution ties to 600 content creators, Amdocs delivers business improvements to drive growth. Amdocs and its 25,000 employees serve customers in over 85 countries. Listed on the NASDAQ Global Select Market, Amdocs had revenue of $4.0 billion in fiscal 2018. For more information, visit Amdocs at www.amdocs.com.

For more information, visit Amdocs at www.amdocs.com.

This press release includes information that constitutes forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995, including statements about Amdocs’ growth and business results in future quarters. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be obtained or that any deviations will not be material. Such statements involve risks and uncertainties that may cause future results to differ from those anticipated. These risks include, but are not limited to, the effects of general economic conditions, Amdocs’ ability to grow in the business markets that it serves, Amdocs’ ability to successfully integrate acquired businesses, adverse effects of market competition, rapid technological shifts that may render the Company's products and services obsolete, potential loss of a major customer, our ability to develop long-term relationships with our customers, and risks associated with operating businesses in the international market. Amdocs may elect to update these forward-looking statements at some point in the future; however, Amdocs specifically disclaims any obligation to do so. These and other risks are discussed at greater length in Amdocs’ filings with the Securities and Exchange Commission, including in our Annual Report on Form 20-F for the fiscal year ended September 30, 2018 filed on December 10, 2018.

Contact:
Matthew Smith
Head of Investor Relations
Amdocs
314-212-8328
E-mail: dox_info@amdocs.com

AMDOCS LIMITED
Consolidated Statements of Income 
(In thousands, except per share data)

 Three months ended 
 December 31, 
  2018  2017 
       
Revenue$  1,012,055 $  977,711 
     
Operating expenses:    
Cost of revenue   662,568    643,197 
Research and development   68,686    68,177 
Selling, general and administrative   121,860    118,668 
Amortization of purchased intangible assets and other   25,844    25,526 
    878,958    855,568 
Operating income   133,097    122,143 
     
Interest and other income, net   1,522    121 
Income before income taxes   134,619    122,264 
     
Income taxes   32,927    5,391 
Net income$  101,692 $  116,873 
Basic earnings per share$  0.73 $  0.81 
Diluted earnings per share$  0.72 $  0.80 
Basic weighted average number of shares outstanding   139,639    143,915 
Diluted weighted average number of shares outstanding   140,511    145,346 
Cash dividends declared per share$  0.250 $  0.220 
       

AMDOCS LIMITED
Selected Financial Metrics
(In thousands, except per share data)

 Three months ended   
 December 31,  
  2018  2017  
      
Revenue$    1,012,055 $    977,711  
      
Non-GAAP operating income 174,849  169,064  
      
Non-GAAP net income 137,818  154,466  
      
Non-GAAP diluted earnings per share$     0.98  $    1.06  
      
Diluted weighted average number of shares outstanding 140,511  145,346  
        

Normalized Free Cash Flows
(In thousands)

 Three months ended  
 December 31, 
  2018   2017  
     
Net Cash Provided by Operating Activities$    109,650  $    164,601  
     
Purchases of property and equipment, net (*) (37,278)  (51,779) 
     
Free Cash Flow 72,372   112,822  
     
Payments for Legal Dispute Settlement 55,000     -  
     
Payments for Previously Expensed Restructuring Charges 6,625     -  
     
Net capital expenditures related to the new campus development 2,054   12,818  
     
Normalized Free Cash Flow 136,051   125,640  

(*) The amounts under "Purchase of property and equipment, net”, include proceeds from sale of property and equipment of $31 and $2, for the three months ended 31 December 2018 and 2017, respectively.

AMDOCS LIMITED
Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP
 (In thousands)

 Three months ended
 December 31, 2018
  Reconciliation items  
 GAAPAmortization of Equity based Changes in TaxNon-GAAP
  purchasedcompensationcertaineffect 
  intangibleexpenseacquisitions  
  assets and  related liabilities    
  other measured at fair   
    value    
Operating expenses:       
Cost of revenue$662,568$- $(4,851)$(3,791)$-    $653,926
Research and 68,686 -  (765) -  -     67,921
development          
Selling, general and 121,860 -  (6,501) -  -     115,359
administrative          
Amortization of                   
purchased intangible assets and other 25,844 (25,844) -  -  -     -
Total operating 878,958 (25,844) (12,117) (3,791) -     837,206
expenses          
           
Operating income 133,097 25,844  12,117  3,791  -     174,849
           
Income taxes 32,927 -  -  -  5,626     38,553
           
Net income$101,692$25,844 $12,117 $3,791 $(5,626)   $137,818
        
        
        
 Three months ended
 December 31, 2017
  Reconciliation items
 
 GAAPAmortization of Equity based Changes in TaxOne-time Non-GAAP
  purchased compensation certain  effect tax benefit  
  intangibleexpenseacquisitions relating to  
  assets and related liabilities the new  
  other  measured at fair   U.S. tax  
    value   legislation 
Operating expenses:       
Cost of revenue$643,197$   - $  (4,698)$  (7,890)$   - $- $630,609
Research and 68,177 -  (824) -    -    -  67,353
development       
Selling, general and  118,668 -  (7,983) -    -    -  110,685
administrative       
Amortization of                   
purchased intangible assets and other 25,526 (25,526) -  -  -    -  -
Total operating expenses 855,568 (25,526) (13,505) (7,890)   -    -  808,647
        
Operating income 122,143 25,526  13,505  7,890    -  -  169,064
        
Income taxes 5,391 -  -  -  6,078  3,250  14,719
        
Net income$116,873$25,526 $13,505 $7,890 $  (6,078)$  (3,250)$154,466
        


AMDOCS LIMITED

Condensed Consolidated Balance Sheets
 (In thousands)

 As of
 December 31,
2018
 September 30,
2018
    
 ASSETS   
    
Current assets   
Cash, cash equivalents and short-term interest-bearing investments$458,650 $519,216
Accounts receivable, net, including unbilled of $246,409 and $263,997, respectively 1,008,748  971,502
Prepaid expenses and other current assets 213,996  229,999
Total current assets 1,681,394  1,720,717
    
Property and equipment, net 486,662  496,585
Goodwill and other intangible assets, net 2,690,050  2,710,144
Other noncurrent assets 437,923  420,369
Total assets$5,296,029 $5,347,815
    
LIABILITIES AND SHAREHOLDERS' EQUITY    
    
Current liabilities   
Accounts payable, accruals and other$1,135,277 $1,162,543
Deferred revenue 138,420  132,414
Total current liabilities 1,273,697  1,294,957
Other noncurrent liabilities 523,172  560,816
Total Amdocs Limited Shareholders’ equity 3,452,031  3,448,879
Noncontrolling interests 47,129  43,163
Total equity 3,499,160  3,492,042
Total liabilities and equity$5,296,029 $5,347,815
      

AMDOCS LIMITED
Consolidated Statements of Cash Flows
(In thousands)

 Three months ended
 December 31,
  2018   2017 
    
Cash Flow from Operating Activities:   
Net income$  101,692  $  116,873 
Reconciliation of net income to net cash provided by operating activities:   
Depreciation and amortization 51,477   49,237 
Equity-based compensation expense 12,117   13,505 
Deferred income taxes (4,505)  (9,245)
Gain from short-term interest-bearing investments (30)  (142)
Net changes in operating assets and liabilities, net of amounts acquired:   
Accounts receivable, net (26,406)  (68,797)
Prepaid expenses and other current assets 20,174   2,067 
Other noncurrent assets 2,552   (4,804)
Accounts payable, accrued expenses and accrued personnel (50,332)  70,632 
Deferred revenue (11,922)  (2,944)
Income taxes payable, net 23,887   598 
Other noncurrent liabilities (9,054)  (2,379)
Net cash provided by operating activities 109,650   164,601 
    
Cash Flow from Investing Activities:   
Purchases of property and equipment, net (*) (37,278)  (51,779)
Proceeds from sale of short-term interest-bearing investments 860   56,698 
Purchase of short-term interest-bearing investments -   (52,648)
Net cash paid for acquisitions (8,331)  (53,948)
Other 857   707 
Net cash used in investing activities (43,892)  (100,970)
    
Cash Flow from Financing Activities:    
Repurchase of shares (99,182)  (119,898)
Proceeds from employee stock options exercised 8,379   31,053 
Payments of dividends (35,046)  (31,736)
Investment by noncontrolling interests, net -   48,123 
Other (35)  - 
Net cash used in financing activities (125,884)  (72,458)
    
Net decrease in cash and cash equivalents (60,126)  (8,827)
Cash and cash equivalents at beginning of period 418,783   649,611 
Cash and cash equivalents at end of period$358,657  $640,784 
        

(*) The amounts under "Purchase of property and equipment, net”, include proceeds from sale of property and equipment of $31 and $2, for the three months ended 31 December 2018 and 2017, respectively.


AMDOCS LIMITED
Supplementary Information
 (In millions)

 Three months ended
 December 31,
2018
 September 30,
2018
 June 30,
2018
 March 31,
 2018
 December 31,
2017
 North America$   660.5 $   638.2 $   644.8 $   624.2 $   643.0
 Europe 146.1  150.6  139.3  148.6  133.7
 Rest of the World 205.5  213.8  218.1  219.5  201.0
 Total Revenue$   1,012.1 $   1,002.6 $   1,002.2  $ 992.3 $   977.7


 Three months ended
 December 31,
2018
 September 30,
2018
 June 30,
2018
 March 31,
 2018
 December 31,
2017
Managed Services Revenue$   525.5 $   508.9 $   515.0 $   508.9 $   518.7


 As of
 December 31,
2018
 September 30,
2018
 June 30,
2018
  March 31,
 2018
  December 31,
2017
 12-Month Backlog$   3,370 $   3,360 $   3,330 $ 3,320 $ 3,260